Company agrees to pay $18 million amid merger with Trump’s Truth Social
Jenny Goldsberry
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Digit World Acquisition Company agreed to pay an $18 million fine imposed by the Securities and Exchange Commission.
DWAC is the “blank check” company that helped fund Trump Media and Technology Group and has been under investigation by the SEC since December 2021. It claimed to have raised $300 million for TMTG, the parent company of Truth Social, and had plans to merge with the company. However, now it will have to pay the fine if it continues the merger, because it wasn’t clear about its intentions with its investors.
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“DWAC failed to disclose its discussions with TMTG and failed to disclose a material conflict of interest of its CEO and Chairman,” the director of the SEC’s Division of Enforcement, Gurbir S. Grewal, said in a statement Thursday. “In the context of a SPAC – a ‘blank-check’ entity without business operations – these disclosure failures are particularly problematic because investors focus on factors such as the SPAC’s management team and potential merger targets when making financial decisions.”
DWAC stock dropped 14% after the filing revealing the SEC investigation was released, according to Seeking Alpha. As of this report, the stock had increased from a little over $13 on Thursday to roughly $20 Friday, the day after the fine was announced.
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Former President Donald Trump remains on Truth Social despite being reinstated on Twitter. Trump has over 5 million followers on the platform.
Meta, Facebook and Instagram’s parent company, announced a similar platform to compete with Twitter and Truth Social called Threads. It received 70 million new users in the first few days of its launch.